Vote puts mall rivals closer to merger

Simon Property says 85% of common stock tendered

February 18, 2003|By BLOOMBERG NEWS

NEW YORK - Simon Property Group Inc., the world's largest mall owner, said yesterday that holders of 85 percent of the common stock in rival Taubman Centers Inc. agreed to its $4.25 billion tender offer.

About 44.1 million of 52.2 million Taubman Centers shares were tendered as of Feb. 14, said Dan Gagnier, a spokesman for Simon Property, which is joined in its bid by Australia's Westfield America Inc. Taubman Centers recommended that investors reject the $20-a-share offer, and Simon Property had said it would abandon its bid if at least two-thirds of the shares weren't tendered.

The battle, pitting two pioneering families in the mall business, isn't over. A sale requires the approval of shareholders owning two-thirds of the shares, and the Taubman family has a 30 percent stake through a special series of preferred shares.

"Even if you get an affirmative vote, you don't have a deal," Richard Imperiale, who helps manage $1.4 billion for Forward Funds Inc. and tendered his shares, said before the tender results were announced. "This is a vote-of-confidence kind of thing."

Shares of Taubman Centers rose 18 cents to $16.66 in New York Stock Exchange trading Friday. U.S. stock markets were closed for Presidents Day.

Simon Property wants Taubman Centers' 30 malls, which are among the most profitable in the United States, including Beverly Center in Los Angeles, based on retail sales. Occupancy at the malls, though, has lagged behind industry averages in recent years, according to analysts.

The amount of shares Simon Property received is "insufficient," Bloomfield Hills, Mich.-based Taubman Centers said in a news release.

Simon Property fell short of its goal when considering the special series of preferred shares, Taubman Centers said. The rights of the preferred shares help boost the number of voting shares to 84 million, Taubman Centers said.

"Simon's hostile offer is not a logical catalyst for a sale," Taubman Centers said in its statement. "The board's position remains clear - the company is not for sale and there is no roadmap to completion of this offer."

Still, the large number of shares tendered may increase pressure on the company's independent board members to persuade the Taubman family to go along with a sale, investors and analysts have said.